CIBC Mellon's latest research reveals how pension funds are adapting to market shifts and ESG demands
In this webinar by Benefits and Pension Monitor, sponsored by CIBC Mellon, Darlene Claes-McKinnon and Michael Graham presented key insights on the challenges Canadian pension plans face.
These challenges have emerged due to a mix of long-term and short-term pressures, including higher interest rates, global geopolitical shifts, and domestic factors that impact institutional investments.
Claes-McKinnon, vice president, Relationship Management at CIBC Mellon, noted, “Every client in every segment is under pressure these days. We hear and see that everyone is changing in their own way, to meet their own needs.”
This observation came from research CIBC Mellon conducted with 50 of Canada’s leading pension plans. Claes-McKinnon added that both their research and BNY Mellon’s studies reveal how all clients face increasing pressure and the need for change.
The research addressed significant themes, such as asset allocation, talent management, and societal trends. Asset owners are rethinking how they allocate assets in response to both short- and long-term pressures.
Additionally, societal trends are driving pension funds to consider environmental, social, and governance (ESG) factors in their investment decisions. However, “only a small fraction (12 percent) have made public commitments related to ESG,” a phenomenon referred to as ‘green hushing.’
Another important theme is the consolidation trend within the Canadian pension industry. A significant portion of respondents (61 percent) are managing assets on behalf of other institutional investors.
Graham, vice president, Quebec and OCIO Segment head at CIBC Mellon, commented, “It is clear from the results that larger plans in Canada see scale as an important driver of their future success,” noting that consolidation presents opportunities for talent retention and development.
The webinar also explored non-financial factors influencing pension plans, particularly the Truth and Reconciliation movement.
A majority of respondents (58 percent) are developing strategies to address Indigenous stakeholders, while 48 percent are enhancing services for Indigenous individuals and institutions.
Looking ahead, respondents identified two key risks: economic challenges and technology risks, including the complexities of data management.
The research highlighted that while the economic environment remains difficult, Canadian pension plans continue to adapt and innovate in response to these pressures.
With an emphasis on asset allocation, societal trends, consolidation, and risks, this webinar provided a comprehensive overview of the strategies and opportunities available for Canadian pension plans amid rising challenges.
